|News||Crude oil declines after slowing Chinese growth|
|Analysis||Crude oil is moving lower for the second consecutive day affected by pessimistic from China today that showed a slower pace of growth in the third quarter, which would affect the global recovery since China is the world’s second largest economy and it has a main role in the global recovery.|
Crude oil futures for November settlement opened the session at $86.27 a barrel, and recorded the highest at $86.63 and the lowest at $85.53, and are trading now around $85.96 a barrel.
Also, the German comments yesterday damped investors’ hopes that Europe could find a plan to solve its debt crisis, as Germany said that EU leaders will fail to meet market expectations and other leaders’ calls to declare a comprehensive plan and measures that would solve the debt crisis and protect Greece from default.
Hopes around the globe appeared since the beginning of this week that European leaders would find a way to contain the crisis and prevent it from spreading, especially after G-20 finance chiefs gave EU leaders a deadline till the October 23 crisis summit to bring forward an effective plan to contain the crisis, which made investors a little optimistic over the outlook for the continent.
China has a major role in the global pace of recovery as it considered the world’s second largest economy, and has the biggest share in the world’s exports, and a slower than expected pace of growth is considered a big hit for the global economy, as it recorded 9.1% annual expansion during 3Q compared slowing from the previous 9.5%.
In addition to that, China is the second biggest oil consumer and a deteriorating economy would absolutely affect demand on crude oil negatively, which addes more negative pressure on oil and drive it to the downside along with German comments that damped hopes in Europe.
On the other hand, one of the major factors that affected crude yesterday is the rise in the U.S. dollar which pushed crude oil to the downside significantly, as the USDIX closed yesterday’s session at 77.19 from the opening at 76.61; today, it reached a high of 77.24 and a low of 76.94 and it is currently trading positively around 77.28.
It is expected that crude would continue its volatility this week ahead of the 23rd summit that may reveal the roadmap for Europe but today it may take a downside direction or an upside direction ahead of major fundamentals that will be issued from Europe and U.S.
The British fundamentals will take the lead today, as CPI data is expected to show a rise in inflation levels in the Kingdom to reach 4.9% which considered as a high level indeed, and investors will look at the Euro Zone confidence figures as well.